A firm is evaluating a new project which would start next year and is expected to have a life of 5 years. All of the following are related to the project. Which of the following should be included into the Free Cash Flow when computing the NPV of the project?

1. Operating Cash Flows (OCF) from this project derived from an Income Statement Pro-Forma, where all project related revenues and costs (including taxes but not interest) are accounted for every year of the project. OCF does not account for depreciation of the project-specific equipment per se but takes into account the depreciation tax shield.
2. Half of the $100,000 cost of the quality check equipment which will be used for this project. The quality check equipment is currently owned by the firm and has idle capacity for the full duration of the new project.
3. $3mln paid for the land (the payment was made when the land was purchased 10 years ago) on which the project will be located.
4. $5mln current market value of the land on which the project will be located and $6mln future expected market value of the projects land in 5 years
5. The change in Inventories due to an increase in sales associated with the project.
6. An evaluation of the projects viability by an outside consultant which was completed a month ago. The consultant was paid $15,000 at that time.
7. Proceeds from the sale of equipment related to the project in the projects terminal year.